And while Scotland, Wales and Northern Ireland have also registered broadly rising returns, those in central London have been falling for the past six months from 4% to 3.5%.
Ian Potter, managing director of ARLA, said: “Our data clearly shows that landlords around the UK must choose their rental property wisely to ensure they receive the returns they expect.
“I would always recommend using an experienced ARLA agent when letting a property as they will be able to give the most up-to-date insight into the local rental market.”
One reason for this difference in rental return rates could be the variation in capital values around the country.
ARLA has found that the value of the average rental house in London stands at £1,251,000 compared to just £173,000 in the Midlands.
Meanwhile rented houses in Scotland, Wales and Northern Ireland have an average capital value of £197,000.
Rental figures for flats followed a broadly similar geographical pattern with central London properties offering an average return of 4.1% compared with returns of 5.2% and 5.8% in the North East and North West respectively.
The survey also showed the average void period remained steady at three weeks across the UK.
Potter added: “It may be that rental returns in a particular area come as a surprise to those not directly involved in the local market.
“As void periods have stabilised landlords may have an easier job of forecasting returns once an indicative figure has been received. However some untenanted time should always be factored in to any landlord’s investment calculations.”
